“The Sustainable State: The Future of Government, Economy, and Society” by Chandran Nair

Evidence of the scarcity of earth’s resources is all around us, in water shortages in Cape town, a choking tropical haze in Indonesia, or increasingly overcrowded and unaffordable Asian cities where people live in “coffin cubicles” and “cage homes”. Action is required. But what kind of action, and which actor is best suited to bring about change that will allow the peaceful co-existence of humankind on an increasingly crowded and resource-constrained planet Earth? Chandran Nair, in his book, The Sustainable State, offers a new narrative of sustainable development. He takes on tough questions like how to price in negative externalities, such as early deaths from the pollution from coal-fired power, and grapples with the reality that the developing world will likely never enjoy the living standards of the West.

Nair argues that the solutions require new models, including a different form of government—one not co-opted by consumption and growth-driven corporations—so that living standards “will improve in a manner that does not consume or abuse resources at a faster rate than they are replenished and that also preserves the right for future generations.” Nair’s target audience, he says, is the next generation of young leaders, specifically the world’s non-Western elites, who he urges to accept that to succeed, Asia must reject the path taken by the West.

Nair hopes to coax his readers, “who are comfortable with Western ideas, to think again regarding the future of their countries.”

The Sustainable State: The Future of Government, Economy, and Society, Chandran Nair (Berrett-Koehler, November 2018)

Nair is the founder of the Global Institute for Tomorrow, a pan-Asian “think-and-do” tank, who spent his earlier career as an environmental consultant. As with his previous book, Consumptionomics, Nair hopes to coax his readers, “who are comfortable with Western ideas, to think again regarding the future of their countries.” Central to the book is Nair’s belief that capitalism has failed to provide sustainable outcomes. He writes that most of the approaches to sustainability, “—based on free markets, technological advances and the spread of democracy—were simply wrong.” Nair implicates many global actors in this web of misunderstanding, including the UN Global Compact, for “not taking a clear position” and allowing multinational corporations to showcase

their all-too-superficial attempts at sustainability while allowing the UN to promote its engagement business… for fear of upsetting corporate members of the Global Compact and the numerous other Business Advisory Councils it has created.

In twelve chapters, an introduction, and a conclusion—entitled “Either States Act, or Doom Looms”—Nair tells readers what is wrong with the world and its neo-liberal economic models, and proposes a new model, based on a strong state, that earns the trust of the people, and acts to bring everyone up to a decent standard of living. But how?

This new paradigm he proposes seeks to redefine prosperity and freedom in an era of resource constraints. As the populations of China, India, Indonesia, not to mention Brazil, Nigeria and the rest of the developing world grow, they must confront what Nair calls the “India question”: how can India, a country of 1.2 billion (peaking at 1.5 billion in 2050) lift nearly half a billion people out of poverty in thirty years, while curtailing emissions and resource use at the same time? The answer lies with the “strong state”, a term Nair uses throughout to mean a form of government that

uses the tools of state management to build a twenty-first century economy based on providing a shared prosperity for their large populations through the management of shared resources, containing the runaway impacts of consumption-driven economic growth and the associated externalities, yet avoiding the need to be authoritarian.

The strong state is the solution to the problem that lies at the center of Nair’s worldview, which is that the world’s majority cannot and should not aspire to live like the West. Nair’s vision is of a state in which collective welfare overrides individual rights. (For anyone who is horrified by this, a trip to developing Asia, and an inventory of what people lack, might convince you otherwise). In the strong state, rights are to

will need to treat resource management as the center of economic planning, rather than… as an afterthought to growth, consumption, and production.

Ultimately this lays a heavy burden at the state’s feet, that of pricing resources adequately so as to internalize externalities.

The question of how a state does this is largely left unanswered, although the ideas behind it are seductive. The reader suspects it functions something like China, to which Nair devotes a chapter, showcasing it as the best example of a strong state in the developing world today, even while maintaining that a strong state cannot be authoritarian. The Sustainable State relies on governments to get pricing right, yet the Chinese solar industry, or its steel industry—subject to boom-and-bust cyclicality (poster children for the unintended consequences of China’s intervention in capital allocation through state-directed lending) exemplify how difficult a task this is. In terms of pricing in externalities, China does have a carbon trading market, but so do the European Union and California.

Nair’s thinking hinges on the virtue of China’s one-party system, which has been “oriented toward the social good.” He borrows “moderate prosperity”, the Chinese government term, to describe the level of affluence a strong/sustainable state is striving for. What Nair likes about China is the strong state mechanisms it has in place, as he puts it, “the institutions that can organize and discipline society.” (Nair’s complaint that he is “often attacked as a Communist” provokes a wry smile.)

Even as he admits that for all the differences with the West, China is still guilty of a growth-at-all costs attitude toward economic development, he maintains that

when Beijing does decide to pursue a true sustainability agenda, it will already have in place the tools and mechanisms to intervene in the economy. Other countries… will need to build these tools from scratch or recapture them from the vested interests that have already taken control.

The China chapter is important, as it comes closest to being a practical guide to the strong state. Though one can see, in some theoretical way, China adjusting its economy for sustainability, there is not a great deal of evidence that that is really what it intends to do: on the contrary, its strategy seems to be to mine the rest of the world while it still can. China is all about contradiction and nuance, and in writing about it, Nair tackles a subject that could easily be a book in itself. Yet to dismiss the book for a particular view on China would be to miss the finer points of Nair’s message. Indeed, democracies can be strong states. Nair proffers the example of the US in the 1930s, and Franklin D Roosevelt’s New Deal, to showcase many desired elements. Roosevelt enacted programs like the Works Progress Administration with the people’s mandate, winning landslide victories for his

broad-based platform of activist government… protecting the economic rights of both urban and rural areas.

Nair points to Vietnam and Rwanda as other successful strong states in action, and, in a less fraught example than that of China, to Singapore. It is easy to see Nair’s point that Singapore’s government, through an inclusive political process, and deft execution on provision of public housing—“land use is not subject to free-market principles and is not a major contributor to government coffers” has won trust and earned legitimacy, enabling it to intervene in resource allocation, while Hong Kong’s “lacks both popular legitimacy and performance legitimacy.” By performance legitimacy Nair means that Hong Kong has failed to meet people’s basic needs. An example is the present housing affordability crisis. In a telling understatement, Nair writes of Hong Kong that the

government and opposition are severely polarized, which limits the state’s ability to act decisively on social issues.

Collectively, planet Earth needs to get behind the idea that the growth of the physical economy cannot continue forever, and must find different models to live by. Nair is right in saying that in order to survive, society must limit mass consumption and increase material efficiency and equity, while giving high priority to internalizing negative environmental externalities. It’s up to the next generation’s leaders to actualize the solutions.

Jill Baker is an Adjunct Fellow at the Asia Business Council in Hong Kong, a contributor to Forbes.com and a research advisor at Terra Alpha Investments.